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Belt and Road Updates July 11

Belt and Road Updates

July 11, 2019

  • China's Belt and Road Initiative Keeps Expanding and Developing Nations: China's Belt and Road Initiative continues to
    expand, leading nations and billions of people out of backwardness, and into development, through massive scientific-technological projects. A relating of some of the recent, important developments:
    ** Indonesia has asked China to set up a special fund within its Belt and Road Initiative for investment in Indonesia, Southeast Asia's largest economy. Indonesia drew up a menu of 30 projects, worth $91 billion, that China could invest in. Indonesian President Joko Widodo made the request for a special fund during a meeting with China's President Xi Jinping on the sideline of a G20 summit in Japan last week. Were China to agree
    to such a special fund, then Indonesia's Finance Minister Sri Mulyani Indrawati is doing a study to create it.     Already, the BRI is involved in Indonesia. The most high-profile BRI project is a $6 billion high-speed rail project connecting the capital, Jakarta, to the textile hub of Bandung--
    where the founding conference of the Non-Aligned Movement was held. The contract was awarded to a consortium of Chinese and Indonesian state firms in 2015. Another project is a $1.5 billion hydropower plant, funded by Chinese banks and being built by the Chinese state firm Sinohydro in the Batang Toru rain forest on the island of Sumatra.
    ** Lao and Chinese construction companies' representatives, and Lao government officials, met in Vientiane, the capital of Laos, July 3, to discuss four main projects, which include road development and planning, management of machinery and vehicle imports, and technologically advanced machinery for road and bridge construction. Laos has some 2,016 villages that only have access to roads in the dry season, and another 394
    communities that do not have access to roads at all.
    ** Bangladesh: the {Press Trust of India} reported, "China Thursday [July 4] accorded a red carpet welcome to Bangladesh Prime Minister Sheikh Hasina, who held wide-ranging talks with her Chinese counterpart Li Keqiang to further consolidate bilateral ties and signed nine agreements." China has $31 billion of investments in Bangladesh, including the construction of a 6 kilometer long bridge-- costing $3.7 billion-- across the Padma River, as the Ganges River is known in Bangladesh, and a $2.5 billion power plant at Payra, near Dhaka. But the big project that China is trying to build in this region, is the 2,800 kilometer Bangladesh-China-India-Myanmar (BCIM) Corridor, which would link Kunming in China's Yunnan province, with such nodes as Mandalay in Myanmar, and Dhaka in Bangladesh, before terminating in Kolkata, India. But China-India differences have reportedly held it up.

** D.R. Congo: PowerChina To Build Two Hydropower Stations in Congo. The state-owned Power Construction Corp. of China, (PowerChina), which recently built the 150 MW Zongo 2 facility on the Congo River, has agreed to build two more hydroelectric power plants in the Democratic Republic of Congo to help reduce the mining industry's huge energy deficit, its local partners said, {Mining.com} industry publication reported June

27. The lack of electricity means that some mines produce copper and cobalt concentrates instead of the more value-added exports the government is trying to encourage. PowerChina is also constructing the $660 million Busanga hydroelectric project in Lualaba province, which will feed the giant Sicomines copper mine. The smaller and most-advanced of these two projects, a 150 MW plant on the Lufira River, would be built in the southeastern
Lualaba province, while a 900 MW plant in  Kinshasa could cost as much as $3 billion and take seven years to finish, according to executives from the projects' partners. PowerChina signed an agreement with Lubumbashi-based Kipay Investments in April to build the 150 MW plant in copper- and cobalt-rich Lualaba, founder and Chief Executive Officer of Kipay Eric Monga said. PowerChina will have a 51% stake in the venture, and Kipay 49%,
Monga said.

  • China Announces US$ 1 Billion Belt and Road Fund for Africa: Announced July 3 on the sidelines of the Summer Davos Meeting World Economic Forum in Dalian, China, this $1 billion investment fund also achieves another first—in that it will be not be run by the state government—thus being China’s first “NGO.” It will also notably be led, not by a Chinese, but by a South African. Intended to be up and running by September, this fund—to be capitalized by wealthy Chinese businessmen and their families—will headed by Dr. Iqbal Survé, “born and educated in Cape Town” (according to his website). Survé had started his own Sekunjalo investment fund in 1997, leaving his medical career at the call of Nelson Mandela, who was seeking local investors to lead the development of the economy. Since then Survé came to serve as chair of the BRICS Business Council for South Africa, and most recently as a member of the Business Council Chairman for the five BRICS countries. A hedge fund operator he definitely is not. Commenting from China, Dr. Survé said, “The discussions that we’ve had with Chinese business people, state-owned enterprises and family offices, have resulted in the establishment of this fund. Africa is ready to grow and is heading towards a $5 trillion economy. The [Africans] have seen how China was able to grow from 1980, when China made up only 2% of the global GDP when compared to today, where China makes up 19% of the global GDP. This fund is a great boost for the development of Africa.” The fund will be overseen by a Belt and Road Business Council, eventually to grow to 1,000 Chinese and African members.

 

  • Italian Official: The BRI is key to China-U.S.-European cooperation: Italy's China policy architect Michele Geraci gave an interview to Sputnik on July 5th, in which he touched upon the so-called U.S.-China trade war, and several other topics. This past week, Geraci, Undersecretary of State for the Italian Ministry of Economic Development, was present in Rome at Russian President Putin's visit. Geraci was also in Milan, attending the second conference on "Italy and the New Silk Road," sponsored by the Xinhua Class editors. He said he will be in Washington, D.C. next week, visiting the U.S. Office of the Trade Representative. He told Sputnik, on the question of the U.S.-China trade conflict, "We do not want any trade war. I was in China in March to discuss trade issues with Chinese counterparts. I also have regular contacts with American counterparts, and I am going to the United States next week to talk to the U.S. Trade Representative. "My feeling is that the trade war is little by little. It will not be solved magically, but it will not be a war. I think it will be just discussions with each side trying to get a bit more concessions from the other one. So that is an ongoing negotiation. It will not be solved now, but I think it will also not escalate into a serious trade war." Geraci also complained that Italy-China trade has had zero growth in the past years. That is why Italy signed an MOU. "We hope that in the next few months we will start to see the benefits of having signed the MOU with the Belt and Road."
    To the question whether Italy's participation in the Belt and Road Initiative can influence economic relations with Russia, Geraci answered: "The Belt and Road includes all our partners in Asia, including Russia and other countries. So it's an opportunity to increase trade with China directly of course, but also with any other country that is in between, along the road, including of course Russia.     "Now I am beginning to extend the way I see Europe. When I talk about trade partnership, I talk less and less about Europe, and more and more about the New Eurasia, the Eurasian bloc of
    countries with whom we can have partnership. We do this of course with Russia, we do this with the Central Asian countries-- infrastructure development and energy and even agriculture in some of them. This for us very important, and we want to play a leading role as Italy in relations between Europe and Eurasia."
    At the Yesterday Geraci was in Milan at the Second Belt and Road Forum organized by Xinhua-Class editors. Among other things, he said that President Donald Trump's visit to the DMZ is one among the Silk Roads, an "historic event" which should have made newspaper headlines for days.
    Reporting on the event, Xinhua cited Paolo Romiti, CEO of infrastructure group Salini Impregilo, saying "With the New Silk Road, a major boost will be given to logistic infrastructure that today does not even exist."
    "His warning did not come by chance, since the lack of infrastructure is considered here as one of the major weaknesses hampering Italy's further development, and especially in some central and southern regions. On their part, Chinese entrepreneurs also appeared eager to find new opportunities in Italy, counting on the changes that the cooperation under the BRI might provide. "`Now, from the logistic point of view, our main airports
    for cargo shipment (in Europe) are still Amsterdam and Frankfurt,' Fan Erning, Vice-President of Shanghai-based Eastern Air Logistics, told Xinhua. `Yet, we are looking for opportunities to expand in Italy in the future; Milan for example could potentially be a new cargo shipment gateway.... we are
    looking forward to that,' he added." Italian e-commerce entrepreneurs said Italy should follow China's model in the development of innovative e-commerce processes. (Source: Executive Intelligence Review).

 

  • Two Firms Agree on 2,400 km Railway Connector Between Alberta, Canada and Alaska--Century Old Idea; World Silk Road Link. On June 27, an agreement was announced between two Alaska rail companies to cooperate on building the missing link between the Canadian continental rail system, and the Alaska system, to finally provide continental rail connectivity. This is a century-old idea, to have North America connected by rail from the Artic Circle southward through Canada and the U.S. into Mexico and beyond, like Lincoln's vision for the east-west
    Transcontinental Railroad, going from the Atlantic to the Pacific Oceans. But the north-south line was never built out.
    On June 27, the Alaska Railroad Corporation (ARRC) and the Alaska to Alberta Railway Development Corporation (A2A), agreed to cooperate on the plan to build a US$13 bn, 2,400 km railway between northern Alberta to join the inland terminus of Alaska's existing rail system at the town of North Pole just southeast of Fairbanks. The two firms will collaborate on the process of getting rights of way, design specifics and financing.
    The impetus for this deal comes from the desire of mining interests to have faster shipping from the inland minerals regions to Asia through the ports of Alaska. The proposed new rail corridor would run through the Canadian provinces of Alberta and British Columbia, and the Yukon Territory to near Fairbanks, then south to the south central ports in Alaska. The railway's advocates say that using Anchorage and Valdez and other ports,
    will cut off four days of shipping time to Asian destinations, in comparison with any other port on the North American coast.
    In the larger, strategic economic sphere, providing the continuous rail connection from inland North America all the way through Alaska, points up the possibility of a Bering Strait tunnel link to Asia, opening up the vast World Land-Bridge span from Eurasia and Africa through to South America, via North America.
    The importance of this perspective has been promoted for decades by American economist Lyndon LaRouche. In May 2007, LaRouche spoke discussed this project in Moscow, when he was a featured guest at the Russian Academy of Sciences. In a paper submitted to the Moscow conference titled, "A Transcontinental Eurasia-America Transport Link via the Bering Strait," LaRouche said: "The intention to create a trans-Siberian rail system, implicitly extended across the Bering Strait, to North America, dates implicitly from the visit of Dmitry Ivanovich Mendeleyev to the 1876 U.S. Centennial Exposition in Philadelphia..."
    Specific requirements for the rail grid needed to connect Canada and Alaska for the Bering Strait tunnel link to Eurasia have been spelled out  repeatedly by consultant Hal B.H. Cooper, who did a feasibility study for the Canadian Arctic Railway, seeking to build the missing links.(Source: Executive Intelligence Review).

 

  • Geneva Event Lauds Eurasian Connectivity. The Crans Montana Forum, named after a small city in the French-speaking part of Switzerland, met for its annual congress in Barcelona, gathering heads of government, key business players, and representatives from international organizations. The {Euronews} journal sat down with the forum's honorary chairman and founder, Jean-Paul Carteron, reporting the
    following: "The forum has never been politically engaged, we simply choose themes that help towards the normal functioning of the world. Our mission from the beginning was to create a bridge between the newly democratized countries of Eastern Europe, following the fall of communism, and the West.... Our breadth of activity includes the former Soviet Union, Greater Europe, the Middle East, the Gulf and Africa.
    "To celebrate its 30th anniversary, Crans Montana has launched a new initiative: the Med-Eastern Cooperation--from Italy to Russia via Azerbaijan, Adriatic and Black Sea countries have the potential to become key players in regional integration and economic development.
    "`You can imagine the maritime route as a sort of highway -- you can use it to develop cooperation between regions, for example, adopting trade facilitation tools, adding also other balanced development systems for instance investments in a logistic platform in industrial areas related to maritime channels.... They can play a role in the middle between business and also international relations,' said Vittorio Torbianelli from
    the Port System Authority of the Eastern Adriatic Sea.
    "Shipping corridors are benefiting from renewed interest as platforms of influence. As in the days of the Renaissance explorer Marco Polo, the Italian ports of the Adriatic, for instance, have the potential to become important connectivity hubs to link the East with the rest of the world and especially Africa. Inatma Coomber, the director of the Sierra Leone Maritime Administration, said: 'Linking the Silk Road to West Africa in particular, I'd be happy about that because it will open up trade in the region, it will help improve our finances and also create needed jobs for our youth population'"
    {Euronews} also quoted Secretary of State of the Romanian Ministry of Foreign Affairs Maria Magdalena Grigore as saying: "`connectivity is not only important for one region but it should be overarching in any strategy when it comes to transport or when it comes to international relations,' she adds, 'time is always money so reducing time would also make corridors, the network, the route competitive from this point of view.'"

in 2017, the Carns Montana Forum held a special conference called the New Silk Road Taskes Shape in Barcelona.

 

  • Operational phase of the African Continental Free Trade Area is launched. A milestone in African trade and economic cooperation was achieved on July 6 when The operational phase of the African Continental Free Trade Area, AfCFTA was launched, during the African Union Extraordinary Summit in Niamey, the capital of Niger. According to a press release published by the AU, "the AfCFTA will be governed by five operational instruments, i.e. the Rules of Origin; the online negotiating forum; the monitoring and elimination of non-tariff barriers; a digital payments system and the African Trade Observatory."“The speedy entry into force of the AfCFTA is a source of pride for all of us”, said AU Commission Chairperson Mr. Moussa Faki Mahamat. He described the free trade agreement as one of the instruments for continental integration in line with the objectives of the Abuja Treaty and the aspirations of Agenda 2063.

The host of the Summit, president of Niger Mahamadou Issoufou, said "the free trade area will tear down borders inherited from Africa’s colonial past and ensure full continental integration."The AfCFTA will be one of the largest free trade areas since the formation of the World Trade Organisation, given Africa’s current population of 1.2 billion people, which is expected to grow to 2.5 billion by 2050.

The concept behind the AfCTA is to increase intra-regional trade within the continent, and reduce the extreme outward-oriented economic relations. The Summit also discussed where to locate the new trade zone's headquarters, with five countries cited as top contenders: Egypt, Ghana, Kenya, Madagascar, and Swaziland.

Continental trade patterns under the ongoing colonial legacy are such that only some 15% of trade within Africa is  between and among African nations, as opposed to nearly 60% in Asia, according to rough metrics from the African Export-Import Bank. Another metric shows that of all African nations' exports, only 16% are intra-African, which is up from the 1980 low level of only 5%, but still lower than intra-regional trade in Europe or Asia. Lowering tariffs and other barriers to trade among African nations can improve this picture, to the benefit of uplifting the productive economy all around.

Nigerian President Muhammadu Buhari has addressed the challenge directly, after holding back from supporting AfCTA until now. July 3 Twitter posts from the Office of the Nigerian Presidency stated, "President Buhari made it clear that [the] Nigerian government will be seeking to include terms that engender the development of policies that promote African production, among other benefits." Buhari said, in his own words, "Africa, therefore, needs not only a trade policy, but also a continental manufacturing agenda. Our vision for intra-African trade is for the free movement of 'made in Africa goods.'"

In addition, the win-win side of intra-African trade will be promoted by the advancement of the Belt and Road Initiative with China.

 

  • China's Africa Labor Practices Are not Exploitative, Says University of London Asia Studies School. An important British policy director on Africa, University of London's School of Oriental and African Studies (SOAS), in a recent study, challenged the common, biased perceptions of labor practices in Africa by Chinese firms. The study was led by SOAS's Dr. Carlos Oya, Reader in the Political Economy of Development, and the findings are based on four years of fieldwork--intensive research on employment patterns and outcomes in the infrastructure construction and manufacturing
    sectors in Angola and Ethiopia, where large-scale surveys of workers and extensive qualitative research were conducted between 2016 and 2018, according to the SOAS website.

Dr. Oya said: "One of the common perceptions of Chinese firms working in Africa is that they do not employ locals, the working conditions are exploitative and that they don't contribute to skills development. However our findings after four years of research have drawn up a very different picture. In Angola, for example, the firms employ some of the poorest where accommodation and food is provided, which in many ways can be
seen as a route to actively helping with poverty reduction in the region."
"In terms of job creation the project found that the proportion of national (Ethiopian and Angolan) workers in the labor force is substantially higher than usually assumed in media perceptions. In Ethiopia these rates were 90% of all workers (and 100% for low-skilled workers) and in Angola, where rates are usually much lower due to skill shortages, estimated rates were 74%," the study stated.

 

 

  • China bringing new energy and ideas to fight against malaria in Africa. In a field which has been dominated by western billionaires like Bill Gates, according to the Atlantic Chinese company New South has been instead concentrating its efforts  on inoculating the people, with anti malaria pills. Having had success in the tiny island nation of Comoros, New South has now set its sights on Kenya, a much larger nation of 50 million people.
  • SGR now working to alleviate hunger in South Sudan: With the announcement that Kenya will allot 10 acres of land at its "inland port" of Naivasha to the Sudanese, goods to ease the humanitarian crisis in Sudan will now travel on the Standard Gauge Railway (SGR). Naivashsa is the current terminus point of the Mombasa-Nairobi SGR rail line, where it is currently stalled, reports the Business Daily Africa.

 

Hussein Askary

Hussein Askary

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